- Meditation and mindfulness startup Headspace and on-demand mental healthcare app Ginger have announced plans to merge into a single company, called Headspace Health, valued at $3 billion, the two companies said Wednesday.
- The two startups focused on mental health and wellness have each raised more than $200 million in venture funding from investors. As Headspace Health, the two companies will offer support for mental health symptoms from anxiety to depression to more complex diagnoses, selling direct to consumer and to employers and health plans.
- Financial terms of the deal, which is expected to close in the fourth quarter this year, were not disclosed.
Mental health is a massive and largely unaddressed issue in the U.S., where about one in five Americans have a mental health diagnosis yet most counties don't have a single psychiatrist. Along with a shortage of providers, the quality of existing care varies widely and in many areas is not covered by insurance, leaving wealthier patients living in large metropolitan areas willing to pay out of pocket really the only population with options for their mental health needs.
However, a crop of well-funded mental health startups, most with a digital bent, have emerged over the past few years as employers and payers look to meet heightened consumer demand and better employee mental health, resulting in rising investments in companies like Lyra, Spring Health, Modern Health and Talkspace.
Mental health was the top-funded clinical indication in 2018, 2019, 2020 and the first half of 2021, according to Rock Health. In the first half of the year, mental health startups brought in $1.5 billion in funding, up from $1.1 billion in funding over all of 2018.
Santa Monica, California-based Headspace was founded in 2010 and has raised roughly $216 million in funding to date. San Francisco-based Ginger, which provides mental health coaching and therapy, was founded in 2011 and has raised about $220 million.
Together, the two aim to provide a fuller spectrum of mental healthcare, including text-based behavioral health coaching, and video-based therapy and psychiatry, for all types of patient populations including consumers, employees, commercial and Medicaid plan members, according to a statement Wednesday.
Headspace Health will cover nearly 100 million lives direct-to-consumer and through its more than 2,700 employers and health plan partners.
Ginger's current CEO, Russell Glass, will serve as Headspace Health's CEO after the merger closes, while Headspace CEO CeCe Morken will maintain her role as CEO of the Headspace division, and will also serve as president of the combined entity.